Impact scale

An impact scale refers to the consequence of loss or severity of damage that may result if the risk eventuates.

In assessing the possible impact or consequences, the assessment can be made from several viewpoints. Following is a list of ideas. It does not cover everything and it is not prescriptive.

Impact of a ML/TF risk could, depending on individual business circumstances, be rated or looked at from the point of view of the following:

• The risk of actual losses to your business: how it may affect your business if a failure of due dilligence caused it to suffer a financial loss from the crime itself, or through prosecution by law enforcement or fines from a regulator.
• The risk to reputation: how it may affect your business if a failure of due dilligence allowed it to have inadvertantly aided an illegal act. Such a failure could result in adverse government sanctions and/or rejection by your customers. You may also consider how it may affect your wider business community (market, industry or professional communities). A whole industry may suffer from a bad reputation as well as your business.
• The risk of furthering a criminal enterprise: a particular transaction may result in a designated service your business provides being used to hide the proceeds of crime, or funds being returned to a criminal enterprise to facilitate further crimes. Money laundering has been associated with crimes such as corruption, bribery, smuggling of goods, people smuggling and slavery, illicit drug trading, illicit arms-trading, kidnapping, terrorism, theft, embezzlement and fraud.
• The risk of causing harm: that a particular transaction may result in people suffering through the conduct of crime, or result in the loss of life or property through a terrorist act.

Three levels of risk impact are shown in the sample below, but you can define as many levels of risk impact as you believe are necessary.